Digital divide

23 January 2014 By Robert Cole

Shares in the educational publisher slumped 8 pct as Pearson warned of weakness in its U.S. business. Restructuring charges will be higher than expected too. It’s disappointing. But the size of the stock price reversal suggests investors have deeper-seated concerns.

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Pearson endured tougher than expected market conditions in the fourth quarter of 2013, it told investors on Jan. 23. It said that cyclical, policy-related and structural pressures affected its educational publishing and assessment businesses in its two largest markets, North America and the UK.

It said that its earnings per share before restructuring charges would be 83 pence, in line with previous guidance and the 2012 figure. Including restructuring charges, per share earnings will be 70 pence, or about 5 percent below previous consensus.

Shares were trading at 11.99 pounds at 1416 GMT, down 98 pence or 7.6 percent.

John Fallon, chief executive, said: “Our trading and financial performance has been weaker than expected, particularly in North America.” He added that conditions were “still challenging in 2014.”

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